Asset Allocation: seven questions for Charlotte Square’s Forsyth

We ask Charlotte Square's Amanda Forsyth seven important asset allocation questions.

Can you outline the breakdown or percentage split of your typical medium risk portfolio? 

One of our key tenets is to consider each client separately, so a ‘typical’ portfolio will be almost impossible to identify.

However, a client who comes to us seeking a ‘balanced’ portfolio in the Apcims sense (75% risk assets) will be given an initial outline showing around 55% in equities, split 25% in the UK and 30% international, and 20% in hedge and alternative assets. We have 5% in property trusts or funds, 10% in fixed interest, 5% in zero dividend preference shares and 5% cash. 

Zeroes have to be handled with care as they are not without risk. On the other hand, those with decent levels of cover and with diversified underlying assets can provide a useful proxy for some of the overvalued assets in the fixed interest space. Another useful tool has been the short-dated bond sector, which plays a valuable role in the current environment of low growth. We have used the Smith & Williamson fund with a degree of success here.

Within equity allocations, we are not tied to the heavy UK bias that often characterises a fund manager’s approach. We will include weightings to Asia and the US, and also certain thematic funds such as Herald Investment Trust.

What technical indicator are you watching most closely?

We still check gold. It has so many implications – risk aversion, dollar strength, inflation hedge – so day-to-day movements as well as medium-term trends can be enormously informative.

How has asset allocation changed over the last three months?